IT outsourcing firm GlobalLogic has crossed $550 million in revenues

Global Logic has a strong play in media and communications vertical which constitutes close to 30-35 percent of the total revenue.

BENGALURU: IT outsourcing firm GlobalLogic has crossed $550 million in revenues and is on track to achieve the $1 billion target by 2020. The US-based company founded by four Indian IITians in 2000, specialises in outsourced R&D and engineering services for global multinationals and bills the likes of Nokia, Samsung, CocaCola, Ericsson, and the like as its clients.

“We are on track to be a billion-dollar company where our organic growth will take us to 900 million plus (by 2020),” said Shashank Samant, chief executive of GlobalLogic. “We are growing at 20 to 24% organic for the past two years, and continue to expand our gross margin.”

Engineering R&D services is growing at a faster rate than the rest of the IT industry but from a smaller base. That said, the sector has seen a lot of consolidation in the past few years with private equity players and other global companies expanding into new verticals. Even in the case of GlobalLogic, Canadian Pension Plan Investment Board (CPPIB), one of the largest private equity investors in the world picked up half of the 96% stake owned by Apax partners last year. Now, GlobalLogic is privately held by Apax Partners and CPPIB.

The San Jose-based company is one of the larger players in the engineering services sector and has acquired eight companies since its inception. In 2017, they hired merger and acquisition specialist Jonathan Rothenberg to double the number of acquisitions in the next three years. The company has also said that it intends to buyout more than one Indian firm in its drive to becoming a $1 billion firm by 2020.

That said, identifying and pursuing niche companies in areas like IoT, 5G, autonomous driving, machine learning and the like have been quite challenging. Samant said that GlobalLogic recently lost out in the race to acquire a Bangalore-based firm with expertise in 5G communications and termed it a “bitter loss”.

“The good assets get away from the market fast,” Samant said. “These companies are not coming in lower price point either, so we are learning as we go further in terms that we have to pay the top dollars to get the top capability. These are companies between 20 to 75 million and they are rare.”

Global Logic has a strong play in media and communications vertical which constitutes close to 30-35 percent of the total revenue. This if followed by high tech and commerce which is 30 percent, and another 20-25 percent comes from medical devices and industrial engineering work.

Automobile seems to be the fastest growing vertical for GlobalLogic which has grown from zero to 15 percent of the business in the past three years. “Automobile now is 50 million plus on the back of our IP which is huge. It is growing much faster than the rest of the business,” Samant said.

From the infotainment system to the in-car driving experience, the success of Tesla has shown that customers expect the functioning and navigation in a car, to be similar to the ease of using a mobile phone or a tablet. This has forced automobile players to pump in billions in their R&D budget to rethink their systems, Samant said.

Though the engineering services sector has very few players, GlobalLogic competes with the likes of Epam, Luxoft, Globant, and Accenture engineering services all of which have been growing at a similar rate. GloblaLogic currently has about 12,000 plus employees across the globe and delivery centres, called Toy Factories, in India, the US, Eastern Europe and Argentina.